FXCM Releases Detailed Data on the SNB Flash Crash

On January 15, 2015, the Swiss National Bank (SNB) caused a flash crash that lead to historic dysfunction never seen before in the FX markets when it announced that it was completely (not gradually) removing the 1.2000 self-imposed floor on the EUR/CHF exchange rate.

FXCM has compiled data points which demonstrate the unprecedented and extreme dysfunction of the FX market on January 15th. Please watch the video below for the full recording and presentation. For the full recording and presentation please click here.

  • [B]January 15 Was A Market Flash Crash[/B] - The Institutional FX Market Failed And Did Not Function:
    [ul][li][I]No Liquidity[/I] - There was almost no available liquidity for approximately 40 minutes
    [/li][li][I]Dramatically Low Pricing[/I] - External ECN prices went as low as 0.2000 and 0.5000
    [/li][li][I]Extreme Spreads[/I] - The average spreads of EUR/CHF were more than 2000-3000 pips
    [/li][li][I]Extreme Range[/I] - The average range of EUR/CHF was 6000 pips.[/ul]
    [/li]

  • The majority of FXCM liquidity providers had [B]stopped quoting prices during this time[/B]. Had FXCM’s circuit breaks not engaged, the weighted average price of the same orders would have been much lower than the execution price of 1.05, at 0.9760.

  • The January 15 flash crash saw the EUR/CHF drop [B]40% in seconds[/B] whereas the 2010 flash crash in the equities market saw about [B]9% drop[/B] in the Dow Jones Industrial Average [B]over the course of a few minutes[/B].


[I]click to enlarge[/I]

  • The market data show that the losses on January 15 were not the result of FXCM technology or FXCM margin requirements, but rather due to the [B]extreme market dysfunction[/B] resulting from the SNB’s irresponsible and unforeseen announcement to completely remove the 1.2000 EUR/CHF floor.

  • In light of the reckless actions of the SNB, FXCM has since ceased offering any currencies which carry significant risk due to potential manipulation by their respective governments either by a [B]floor, ceiling, peg, or band[/B].

I would highly recommend that anyone new to forex or anyone unsure how things work ‘behind the scene’ watch video presentation in full.

Very good video and explanation of what happened that most people should be able to grasp.

FXCM should be ashamed of themselves.
Blame everyone but themselves.
No disaster management plan. Seems they should have had other liquidity providers.Also obvious operating in a market they don’t really understand. Very very poor.

Hindsight is a wonderful thing, isn’t it